Morning Commentary: Takeda offers dollar notes following euro deal; bond flows negative

By Cristal Cody

Tupelo, Miss., Nov. 16 – Takeda Pharmaceutical Co., Ltd. announced plans early Friday to tap the high-grade primary market with a dollar-denominated offering of notes.

The dollar portion is expected to total less than $10 billion, a market source said.

The Osaka, Japan, pharmaceutical company priced €7.5 billion of euro-denominated senior notes on Thursday following a European roadshow that ended on Wednesday. The proceeds from the deals will be used to fund the company’s acquisition of Shire plc.

Investment-grade issuers have priced more than $18 billion of bonds week to date, short of the $25 billion to $30 billion of supply on average expected, according to syndicate sources.

Secondary trading volume has been heavy over the short market week. Trading volume has included $23.16 billion of high-grade bonds on Thursday, $23.75 billion on Wednesday and $21 billion on Tuesday, according to Trace.

Meanwhile, bond flows turned negative again this past week with a $2.26 billion outflow, following a large $5.69 billion inflow in the prior week, according to a BofA Merrill Lynch research report released on Friday.

The high-grade space, which includes corporates, Treasuries, agencies and mortgages, reported a $500 million outflow following a $1.59 billion inflow in the prior week, according to the note.

Inflows to short-term high grade declined to $1.89 billion from $2.65 billion, while outflows excluding short-term increased to $2.39 billion from $1.07 billion.

Outflows from funds continued, at $830 million this past week and $620 million in the prior week, while inflows to high grade ETFs dropped to $330 million from a $2.21 billion inflow a week earlier, according to the report.

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